This appeal concerns whether the Division of Administrative Hearings (DOAH) properly found that MVP Health, Inc. (MVP) was entitled to attorney's fees and costs under section 57.111, Florida Statutes (2010). MVP requested fees because it had successfully challenged a decision made by the Agency for Health Care Administration (AHCA).

In particular, AHCA— the state agency responsible for licensing home health care facilities— had withdrawn an application for licensure filed by MVP as incomplete. AHCA rejected the application as it found MVP had provided insufficient information to verify its current controlling interests, and had lost its accreditation.

MVP challenged the withdrawal of its application to DOAH. Following a hearing before an Administrative Law Judge (ALJ), the matter was referred back to AHCA, which issued an order stating:

The evidence presented in this matter demonstrates that the Agency erroneously found [MVP's] initial licensing application to be incomplete. In actuality the [ ] application was complete, and [MVP] met all the requirements for licensure at the time the application was submitted. Thus, the Agency should have approved [MVP's] licensure application.

After receiving this favorable order, MVP moved for attorney's fees pursuant to section 57.111(4)(a), Florida Statutes (2010). AHCA objected to the fees request, arguing that its concerns over MVP's ownership and accreditation provided " substantial justification" for issuing the Notice of Withdrawal. DOAH disagreed with AHCA. Following another evidentiary hearing focusing exclusively upon the fees issue, DOAH issued the order on appeal awarding attorney's fees and costs to MVP under section 57.111(4)(a). We reverse.

The " Substantial Justification" Standard

Section 57.111(4)(a) states fees may be awarded in the following circumstances:

Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.

(emphasis added). Section 57.111(4)(a) states that a state agency may avoid fees if its action was " substantially justified." It is the burden of the state agency to show that this exception applies. See Helmy v. Dep't of Bus. & Prof'l Regulation,707 So.2d 366, 368 (Fla. 1st DCA 1998). Here, AHCA claims two facts " substantially justified" its decision to issue the Notice of Withdrawal: (1) the ...

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